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The Matrix Approach to Industrial Policy


  • Karl Aiginger
  • Susanne Sieber


The objective of this paper is to analyse the development of industrial policy in the European Union. The changing concepts and rationale for industrial policy are reported with reference to the treaties and communications of the European Commission. Industrial policy has followed the course of these changes, although in reality, the practical changes have occurred at a slower and less radical pace than the changes in philosophy. A new paradigm of industrial policy has recently been developed by the European Commission in a document that first calls for measures improving the competitiveness in all sectors in terms of rather broad measures, and subsequently acknowledges sector differences in the impact of these measures, calling for complementary sector-specific measures. We label this new paradigm the 'matrix approach' to industrial policy, because it combines horizontal and vertical measures. On the empirical level, we see a divide between countries practising a future-oriented approach emphasising innovation and knowledge, and countries that take a more defensive stance, with higher subsidies and a greater amount of regulation. The countries pursuing the more future-oriented approach achieve higher shares of technology-driven and skill-intensive industries and excel with respect to the goals of the Lisbon strategy.

Suggested Citation

  • Karl Aiginger & Susanne Sieber, 2006. "The Matrix Approach to Industrial Policy," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(5), pages 573-601.
  • Handle: RePEc:taf:irapec:v:20:y:2006:i:5:p:573-601
    DOI: 10.1080/02692170601005507

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    Cited by:

    1. Kristine Farla, 2015. "Industrial Policy for Growth," Journal of Industry, Competition and Trade, Springer, vol. 15(3), pages 257-282, September.
    2. Karl Aiginger, 2018. "New Challenges for Industrial and Structural Policy," WIFO Working Papers 553, WIFO.
    3. Karl Aiginger, 2007. "Industrial Policy: Past, Diversity, Future; Introduction to the Special Issue on the Future of Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 143-146, December.
    4. Karl Aiginger, 2013. "A New Strategy for the European Periphery," WIFO Working Papers 443, WIFO.
    5. Emira Bečić & Jadranka Švarc, 2015. "Smart Specialisation in Croatia: Between the Cluster and Technological Specialisation," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(2), pages 270-295, June.
    6. Hevia,Constantino & Loayza,Norman V. & Meza Cuadra Balcazar,Claudia Maria, 2017. "Industrial policies vs public goods under asymmetric information," Policy Research Working Paper Series 8052, The World Bank.
    7. Finbarr Livesey, 2012. "Rationales for Industrial Policy Based on Industry Maturity," Journal of Industry, Competition and Trade, Springer, vol. 12(3), pages 349-363, September.
    8. Karl Aiginger, 2013. "The "greening" of industrial policy, headwinds and a possible symbiosis," WWWforEurope Policy Paper series 3, WWWforEurope.
    9. Karl Aiginger & Susanne Sieber, 2009. "Industrial Policy in Austria: From Selective Intervention to a More Systematic Approach," WIFO Working Papers 337, WIFO.
    10. repec:wfo:monber:y:2017:i:12 is not listed on IDEAS
    11. Werner Hölzl & Klaus S. Friesenbichler & Agnes Kügler & Michael Peneder & Andreas Reinstaller, 2017. "Austria 2025 – Competitiveness, Location Factors, Market and Product Strategies Pursued by Austrian Enterprises and Positioning in the International Value-added Chain," WIFO Monatsberichte (monthly reports), WIFO, vol. 90(3), pages 219-228, March.
    12. C. Petraglia & D. Scalera, 2012. "Le politiche per il Mezzogiorno negli anni della crisi (2007-2012)," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 4, pages 1023-1048.
    13. Karl Aiginger, 2012. "A Systemic Industrial Policy to Pave a New Growth Path for Europe," WIFO Working Papers 421, WIFO.
    14. Christian Grabas & Alexander Nützenadel, 2013. "Industrial Policies in Europe in Historical Perspective," WWWforEurope Working Papers series 15, WWWforEurope.
    15. N. N., 2017. "WIFO-Monatsberichte, Heft 3/2017," WIFO Monatsberichte (monthly reports), WIFO, vol. 90(3), March.
    16. repec:wfo:monber:y:2017:i:12:p:947-953 is not listed on IDEAS
    17. Neil Foster-McGregor & Mario Holzner & Michael Landesmann & Johannes Pöschl & Robert Stehrer & Roman Stöllinger, 2013. "A ‘Manufacturing Imperative’ in the EU – Europe's Position in Global Manufacturing and the Role of Industrial Policy," wiiw Research Reports 391, The Vienna Institute for International Economic Studies, wiiw.
    18. Alexander Ebner & Fabian Bocek, 2015. "Best Practices as to How to Support Investment in Intangible Assets," WWWforEurope Working Papers series 101, WWWforEurope.
    19. Karl Aiginger, 2013. "A Southern Europe strategy based on vision and industrial policy," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 82(01), pages 127-168.
    20. Marco R. Di Tommaso & Stuart O. Schweitzer, 2013. "Industrial Policy in America," Books, Edward Elgar Publishing, number 13749.
    21. Heinz Zourek, 2007. "The European Commission’s New Industrial Policy in an Integrating and Globalizing World," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 285-295, December.
    22. Ha-Joon Chang & Antonio Andreoni & Ming Leong Kuan, 2013. "International Industrial Policy Experiences & the Lessons for the UK," Working Papers wp450, Centre for Business Research, University of Cambridge.


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